I am often asked “Which p2p lending marketplace do you recommend?“. It is a natural question to ask for people that are familiar with the concept of p2p lending, but have not invested yet.

I feel hesitant to answer it with an outright recommendation for any one marketplace.

Sure I do have my preferred marketplace. Everybody has. But ask 10 different seasoned p2p lending investors and you might get at least 5 different answers. What is right for me, may not feel right for you. There can be no one size fits it all for p2p lending marketplaces. Interestingly as a sidenote investors seem to have less problems to agree why they dislike a platform – and they can also agree on ‘better’ platforms, you just don’t get consensus on the best platform.

What an investor prefers is influenced by his personality and past investment experiences. Investors differ in the expectation they tie to the investment, in risk appetite, in how they perceive and gauge risks. They may prefer a more actively managed investment or a passive investment style. Some enjoy auctions and elements that create competition for others factors like user interface might be a factor that lifts one platform over another.

That such a variety of different models has evolved and still prospers shows that they cater to an audience that is not homogeneous in their needs and wishes. One could argue that there is such a variety because it is a new field and everybody was just implementing ideas and experimenting and there were no role models, but that eventually the models will converge towards a best practise model. And I believe that is and will be happening, but only to a certain degree. Doing business over the internet allows marketplaces to deviate somewhat from the mass market and develop a style that fits a certain clientele easier than it would be for an offline financial offer because the economics of reaching out to and serving this clientele are different.

One entrepreneur recently told me ‘We are different, we just need 10% of the users to like us’ (sry if I rephrased that to much). My answer was ‘Just don’t be to different. Investors are conservative. Why scare 90% of your potential customers away’. I still believe in my answer, because I think it commercially makes sense. However it is minted by my past experience and my perception of the investor behaviour. So I actually want him to succeed in doing things VERY differently and making it as satisfying and enjoyable for those 10% he wants to be the perfect marketplace for.

What do I answer on the question?

At conferences or in other situations without much time, I usually suggest several marketplaces the investor might want to look into and point to my blog for more information.

If there is more time, I usually ask questions to try to find out what the person is looking for, what factors are important for him and what his past investment experience is. Then I tell which marketplaces do well on these factors and might in my opinion be a good match based on what I understood he is looking for. It still feels imperfect and uncomfortable for me sometimes. Maybe it is just a cultural thing, that most people are not comfortable in making recommendations how other people should invest money.

What would be the best answer?

I often think, the straightforward answer is ‘It depends‘. I have never given this answer. Even in situations when I am pressed for a very short answer.